Selling the news...

Well, as expected, Intel and JPM beat. The initial indications are selling into the news. Of course we need to see how the markets fair at the open and through the session today.

Question is, why the selling into the good news? I think the answer is simple. This is a thin market and the big boys swinging the long lines can't easily sell their positions on just any old day. Doing so would adversely affect their market price. The big money waits for conditions where there is sufficient interest in buying their shares - allowing them to dump as close as possible to the current market value of the issue. So watch the volumes today to see if the selling is more significant than usual - that will tell us if the big money is distributing and that would further support the prospect of a near term correction.

Another thing to watch is if many issues which recently 52 week highs get turned away from their last reaction highs before breaking them. I am particularly interested in the performance of the financials and the techs. These issues led this rally and are the early indicators of the markets direction for 2010.

Finally, the FEDs now have the ammunition they need to start cooling off there intervention. They have to start mopping up the liquidity - and the earnings from Intel and JPM help make their case. I expect to see increasing use of the media, such as this bloomberg article, to gradually sensatize the market to the inevitable increase in rates and other steps for the FED to backout. This is very important, as we all know the employment picture has not improved and real estate is still in the crapper, yet the FEDs are staging a move. This means that they have no choice - they can not continue to support liquidity at this level. They would if they could, but there are limits before inflation becomes a reality.

So, we still have macro economic deterioration, big money selling whenever there is an opportunity, and the FEDs being forced to throw in the towel. China is being setup to take the blame this time - as it will be their bubble that bursts and we will simply be the victims of their bad policy, lies and failure. It is the smoke screen that the administration needs.